Can Home Buyers and Sellers Agree to Arbitration AFTER the Sale?

Question #2: How Realistic Is It That They Will?

[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]

Normally, Minnesota home Buyers and Sellers decide when they negotiate the Purchase Agreement whether they will handle any post-closing disputes through arbitration or litigation.

If the parties are amenable to arbitration, they both sign an Arbitration Addendum (their agents, too).

Alternatively, if only one party — or neither party — wants arbitration, they’re deemed to waive it . . . and litigation is the default choice (note: disputes below $15k in Minnesota are now settled in small claims court, also known as Conciliation Court).

And that’s usually the end of it: the vast majority of the time, there are no major issues after closing, and it’s a moot point.

Un-Waiving Arbitration

Which leaves the small % of home sales where there IS a post-closing dispute.

When that’s the case, can a Buyer and Seller who earlier waived arbitration now choose it?

The technical answer: “yes.”

The practical answer?

It’s not very likely.

That’s because, by the time a dispute arises, communication between the Buyer and Seller is invariably strained, and neither side is amenable to cooperating with the other, even if it may be in their own self-interest.

Or, so I hear . . . (thankfully, I have no first-hand experience).



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